SYDNEY, Australia, October 4, 2004 (ENS) -
The government of Prime Minister John Howard offered a multi-million dollar subsidy to shale oil company Southern Pacific Petroleum (SPP) on the condition that the company take legal action against Greenpeace, the Australian branch of the international environmental organization has discovered.

The plan to use taxpayers' money to sue Greenpeace is documented in an internal Department of Industry, Tourism & Resources (DITR) email obtained by the environmental group under Freedom of Information legislation.

The DITR email refers to a 2002 decision by the Federal Cabinet to provide SPP, the developer of the Stuart Shale Oil Project in Queensland, with a sales grant worth nearly $55 per barrel of shale oil or up to A$36.4 million annually.

Written by Marie Taylor, DITR manager for refining and fuels, the email states, "...the Government’s decision to put this arrangement in place was made subject to SPP taking legal action against Greenpeace...”

The sales grant for exports was provided because SPP was unable to access a pre-existing subsidy for domestic sales as they could not find Australian buyers for their oil. SPP claimed this was due to Greenpeace’s campaign against shale oil.

John Ryan, deputy secretary of the Australian Department of Industry, Tourism and Resources, was one of the email's recipients. (Photo courtesy Abare)

"You might recall," wrote Taylor to John Hartwell, head of the DITR Resources Division, and John Ryan, DITR deputy secretary, "these arrangements were put in place to counter Greenpeace's activities which at the time resulted in SPP's inability to sell its product domestically." The email is dated May 19, 2003.

SPP managing director Jim McFarland said in March 2002 that the Greenpeace anti-shale oil campaign had deterred two Australian oil refiners from purchasing SPP oil produced by a demonstration plant. Because there were no domestic sales, federal government financial support was in jeopardy, he said.

"As a direct result of Greenpeace's threatening activities against its potential customers, SPP is being prevented from fully marketing its ultra low sulphur naphtha to Australian refiners," SPP said in a statement.

Confidential Cabinet documents leaked after the decision revealed that the Cabinet approved the multi-million dollar sales grant to SPP against the advice of all federal departments consulted, including Treasury, Environment Australia and Transport & Regional Services.

No legal action was taken against Greenpeace by SPP after the Cabinet decision.

Jeff Sandefer (center), a Texan equity fund manager who headed SPP, is faced with a Greenpeace protest on his way to a business meeting. (Photo courtesy Greenpeace Australia)

Since 1998, Greenpeace has been campaigning to stop the development of shale oil, which it calls "the most greenhouse intensive of all fossil fuels."

In July, the environmental group claimed victory when Queensland Energy Resources announced it was ending oil development of the Stuart Shale Project.

Greenpeace climate campaigner Gareth Walton said “Just days before a federal election that John Howard himself said would be about trust, we have learnt that his government used taxpayers’ money to incite an oil company to sue Greenpeace. I think most Australians will be appalled by this abuse of power and the blatant attempt by the government to silence a non-profit organization.”

The Australian election is set for Saturday, October 9.

“Greenpeace is calling on the federal government to publicly release all documents, including Cabinet documents, relating to this decision," Walton said, "and we have also written to the Prime Minister, Minister [Ian] Macfarlane and the Department of Industry, Tourism and Resources seeking explanation."

Greenpeace is also calling on the Australian Labor Party, the Democrats and the Greens to initiate an inquiry into the matter when Parliament resumes after the election.

Shale oil is extracted from shale rock. Greenpeace was campaigning against the SP Project because of its social and environmental impacts, which include greenhouse gas emissions, dioxin releases, air and water pollution, and health impacts on local people.